Individuals, businesses, and governments use checks widely in the United States and other countries. Checks are almost universally accepted and are a convenient, familiar, and reliable method of payment. Additionally, the check clearing process for obtaining payment on a check is well established.
A check writer (or drawer or maker) writes a check to order his bank to withdraw funds from his account to pay a named payee. To obtain payment, the payee deposits the check with his bank (the bank of first deposit or “BOFD”). Then, the BOFD credits the check amount to the payee's account. To obtain settlement of the check, the BOFD presents the check to the drawer's bank (the “paying bank”) for payment. The BOFD may present the check directly to the paying bank, through a local clearinghouse or exchange, or through an intermediary bank or banks. An intermediary bank can comprise a purely private sector depository institution or a Federal Reserve Bank. When the paying bank receives the check, it settles with the bank that presented the check and deducts the amount of the check from the drawer's account.
Banks use a check adjustments process to correct errors in the check collections process. For example, if the BOFD presents directly a $1,000 check to the paying bank, and the paying bank mistakenly pays only $100 to the BOFD, then the BOFD can request a check adjustment to correct the error.
To perform a check adjustment, a depository institution (“DI”) or their agent creates a check adjustment request in the form of a document or a message. The DI can be the paying bank, the BOFD, an intermediary bank, or an agent for the DI. The check adjustment request message includes the relevant information for correcting the error. For example, the relevant information can comprise routing information for the paying bank and the BOFD, the drawer's and payee's account information, the error amount, and other relevant information. The relevant information for a check adjustment varies depending on the particular requirements of the requesting party.
The DI requesting the check adjustment (the “requesting agency”) sends the check adjustment message to the intermediary or directly to the other DI (the “adjustment agency”). The adjustment agency may require proof of the error before resolving the check adjustment. The proof is called a “document to follow” (“DTF”) and typically comprises a copy of the actual check and, if needed, other supporting documents. Accordingly, in most circumstances, the requesting agency must send the DTF to the adjustment agency to resolve the check adjustment case.
FIG. 1 is a flow chart illustrating a conventional method 100 for forwarding and matching a check adjustment message and an associated document to follow for resolving a check adjustment case. Referring to FIG. 1, in step 105, a requesting agency creates a paper check adjustment message that includes the relevant information about the error. In step 110, the requesting agency mails the paper message and a paper DTF to the adjustment agency. When the adjustment agency receives the paper documents, the adjustment agency researches and resolves the check adjustment case in step 115 based on the paper DTF and the paper check adjustment message. Because the adjustment agency receives a paper check adjustment message, the adjustment agency also must enter the relevant data into a computer for processing.
FIG. 2 is a flow chart illustrating another conventional method 200 for forwarding and matching a check adjustment message and an associated document to follow for resolving a check adjustment case. In step 205 of FIG. 2, the requesting agency creates an electronic check adjustment request message using a DOS computer application program having a direct link to an adjustment agency that provides the DOS based computer application, network, and check adjustment processing service. In step 210, the requesting agency sends the electronic message to the adjustment agency over the DOS link. The requesting agency sends a paper DTF in step 215 to the adjustment agency by mail or facsimile transmission. Accordingly, the adjustment agency receives an electronic check adjustment message and a paper DTF. In step 220, the adjustment agency manually matches the paper DTF to the electronic message. Then, in step 225, the adjustment agency researches and resolves the adjustment case based on the paper DTF and the electronic message.
The conventional methods of resolving a check adjustment case include several deficiencies. For example, the time-consuming step of mailing the check adjustment message and/or the DTF delays resolution of the check adjustment case. While creating an electronic check adjustment message can increase the speed of initiating a check adjustment case, the conventional methods still require sending a paper version of the DTF. Accordingly, the check adjustment process involves another time-consuming delay while the paper DTF is mailed or faxed to the adjustment agency. Additionally, the adjustment agency must manually match the electronic message to the paper DTF. That manual matching process also can be time-consuming, as well as prone to error.
Accordingly, a need exists in the art for a method and system for resolving check adjustment cases that overcomes the deficiencies of the conventional methods. Thus, a need in the art exists for creating and sending an electronic check adjustment message and an electronic DTF. Furthermore, a need exists in the art for matching an electronic check adjustment message to an electronic DTF.